How to check references for a small business.

You found a candidate you like. The resume reads well, the interview went fine, and you are tempted to make the offer. The reference check is the step most small-business owners skip — not because it does not matter, but because chasing down former managers takes hours nobody has. This guide is the short version of doing it right anyway.

Why reference checks matter

A bad hire is one of the most expensive mistakes a small business makes. Industry and U.S. Department of Labor figures put the cost of a bad hire at around 30% of the employee's first-year salary, and for owner-operators the real number often lands in the $10,000–$20,000 range once you add training, lost productivity, and the cost of recruiting all over again.

Resumes and interviews tell you how someone presents. References tell you how they actually worked: whether they showed up, followed through, took feedback, and left on good terms. That is signal you cannot get any other way, and it is the single best predictor that the person who impressed you on Tuesday will still be impressing you in ninety days.

Get consent first (the legal basics)

Before you contact a single reference, get the candidate's written authorization to do so. This is partly courtesy and partly law. In the United States, when a third party runs the check for you — a screening company or service — it can fall under the federal Fair Credit Reporting Act (FCRA), which sets out a few non-negotiables:

• Disclosure — you tell the candidate, in a standalone document, that a check will be run.
• Consent — the candidate authorizes it in writing before anything happens.
• Dispute rights — the candidate can see and contest what comes back.
• Adverse-action notice — if the report contributes to a decision not to hire, the candidate gets notice and a chance to respond.

If you are calling references yourself, informally, the FCRA may not apply the same way — but getting written permission is still the right move, and several states layer their own rules on top. Treat consent as the starting line, not an afterthought.

The 8 questions to actually ask

You do not need a long script. You need a handful of questions that get past "they were great" and into what the person was actually like to work with. Ask these, in roughly this order:

1. How do you know the candidate, and for how long? Confirm the relationship and that the dates match the resume.
2. What were they responsible for? Let the reference describe the role in their own words and compare it to what the candidate told you.
3. What did they do better than most? Real strengths come with examples; generic praise does not.
4. Where did they need support or coaching? Everyone has a growth area. A reference who claims none is not being straight with you.
5. How did they handle pressure, deadlines, or a busy stretch? This is the trait that breaks most small-business hires.
6. How did they take feedback? Coachability matters more than polish, especially in a small team.
7. Why did they leave? Listen for whether the story matches what the candidate told you.
8. Would you hire them again? The single most revealing question. A confident yes is gold; a pause speaks volumes.

Always close with one more: "Is there anyone else I should talk to?" The best signal often comes from the second name, not the one the candidate handed you.

What a good reference sounds like (and a bad one)

A strong reference is specific and unprompted. They name projects, describe how the person handled a hard week, and volunteer detail you did not ask for. When you ask whether they would rehire, the answer is immediate.

A weak reference is vague and careful. You get adjectives without examples — "reliable," "a team player," "good energy" — and the moment you ask something pointed, the answers get shorter. That is not always a deal-breaker; some people are simply reserved, and some former employers limit themselves to confirming dates for liability reasons. But when warmth suddenly turns into one-word replies, the temperature change is the message.

Red flags to listen for

None of these is automatically disqualifying. Each one is a reason to dig deeper before you decide.

• Hesitation on "would you rehire." The pause is the answer.
• Dates or titles that do not match the resume. Small gaps happen; a job that did not exist as described does not.
• A reference who will only confirm employment. Sometimes policy, sometimes a quiet way of saying nothing nice.
• Stories that contradict the candidate's. Especially around why they left.
• References you cannot independently verify. A "manager" whose number routes to a personal cell and who sounds suspiciously like a friend deserves a second look.

The goal is not to catch people out. It is to make sure the person you are about to trust with your front office, your customers, or a key on the door is the person the resume describes.

How to do it faster

The reason references go unchecked is time. Done by hand, a thorough check is two to three hours per candidate once you factor in voicemails, callbacks, and phone tag. Multiply that across a short list and the step quietly disappears.

A few ways to compress it:

• Ask in writing. A short, structured questionnaire respects the reference's time and gets you comparable answers across candidates.
• Batch it. Send every finalist's references the same questions on the same day instead of working them one at a time.
• Standardize the verdict. Decide in advance what a green, amber, or red answer looks like so you are comparing like for like, not gut feel to gut feel.

That is exactly what MyLynda automates. Once your candidate gives written consent, we email their references a structured questionnaire — we do not call them — collect and analyze the answers, and return a clear green / amber / red verdict with the specific questions you should ask in the next interview. It costs $2.99 per check, and your first one is free. It is the difference between skipping the step and actually doing it before you make the offer.